Buy-to-let mortgages are different to standard residential mortgages. Lenders for buy-to-let will look at your income as well as the percentage of rental income you will get from renting out the property. Buy-to-let mortgage deals can be at fixed, variable or tracker deal rates.

Buy-to-let mortgage deals can be on a repayment or interest-only basis. Interest-only mortgages mean that repayments won’t go to repaying the loan. The end of the mortgage usually entails a sale of the property to cover the outstanding amount.

Other mortgages will be on a capital repayment basis where you pay the interest on top of the loan. However, most buy-to-let mortgages are interest only and the income you get from rent can be put in a savings account for paying back the mortgage at the end of the term.

When you get a mortgage for you buy-to-let you will need a larger deposit than standard mortgages. Arrangement fees are usually 1.5% to 2% of the mortgage. Some lenders may not accept your request for a mortgage because it relies on a third party (the tenant) for income to pay the mortgage.

Tips For The Best Buy-To-Let Mortgage Deals

The rental market

Don’t just buy the cheapest property or the one that looks the best. Think about the location’s demographic and buy a property that the tenant would like. You should also think about any potential legislations that the government may introduce to hinder your property’s attractiveness to tenants.

Be careful and do the maths

Buy-to-let mortgages are risky and they require careful sums. Take into account maintenance costs as well so you know that you can meet any monthly mortgage payments to avoid bad debt. Also consider the tax payments on income and agency fees.

All about location

The location is key. Picking the right location can make or break the deal. An area that has valuable properties will be of no use if there is no demand. Tenants in the area need to be willing to pay the high rents that come with it.

Think long-term

A mortgage for buy-to-let property isn’t a short-term investment and you may need to be patient. You can put down a bigger deposit, which can give you lower mortgage rates, but you need to wait for the returns either way. If you can be prepared to live without a large sum of money for a long period of time then a buy-to-let mortgage will be ideal.